Question

Marcy's, Inc. operates department stores located primarily in the Southwest, Southeast, and Midwest. In its 2013 third-quarter report, the company reported Cost of Goods Sold of $2.4 billion, ending inventory for the third quarter of $3.5 billion, and ending inventory for the previous quarter of $3.1 billion. Estimate merchandise purchases for the third quarter. (Enter your answer in billions rounded to 1 decimal place.)

Answer 1

Answer:

Estimate merchandise purchases for the third quarter is $2.8 billion

Explanation:

The computation of the merchandise purchases for the third quarter is shown below:

= Ending inventory + Cost of goods sold - Beginning inventory

= $3.5 billion + $2.4 billion - $3.1 billion

= $2.8 billion

We simply apply the cost of goods sold formula which is shown below:

Cost of goods sold = Opening inventory + Purchase - ending inventory